摘要：

This paper studies the effect of political alignment between state governors and counties on municipal bond yield spreads. Exploring close gubernatorial elections, we find that politically misaligned counties face higher yield spreads while aligned ones benefit from lower spreads. The magnitude of the effect varies on bond characteristics: bonds with long maturity, backed by utility revenue, and issued by counties less reliant on state transfers are less sensitive to political alignment shock. In addition, yield spread variations correlate with changes in credit risk and inter-governmental transfers. Politically misaligned counties elevate bond issuance despite augmented costs, offsetting reductions in intergovernmental transfers.

报告人简介:

Weijia Zhao is a Finance Ph.D. candidate at Northwestern University Kellogg School of Management and a Quantitative Researcher at ExodusPoint Capital Management. His interests are in Political Economy of Finance, in particular the effect of political relationships/events on the geographical re-distribution of public resources.